Japan avoided a recession as revised data showed the economy grew in the fourth quarter of 2023, instead of shrinking as initially estimated.
Japan released revised official figures on March 11, showing that GDP grew 0.4% year-on-year in the fourth quarter of 2023 and 0.1% from the previous quarter. Last month, preliminary estimates showed both figures had fallen, pushing Japan into recession after two consecutive quarters of negative growth.
Still, consumption is expected to decline by 0.3% in the final quarter of 2023, more than last month's estimate. The figure has fallen for three straight quarters.
High inflation is weighing on domestic demand and private consumption here, putting growth in jeopardy. Japanese household spending fell 6.3% in January from a year earlier, the sharpest decline in two years.
People shop at a store in Tokyo (Japan). Photo: Reuters
However, the growth is offset by a revised 2% increase in business investment in the fourth quarter of 2023 from a 0.1% decline, explained Marcel Thieliant, Asia- Pacific director at Capital Economics.
Today’s data also reinforces the Bank of Japan’s view that the economy is recovering, with businesses eager to increase investment. Combined with positive signs of wage growth this year, most economists now expect the BOJ to scrap negative interest rates at its March or April meeting, which would be the first time the central bank has raised rates since 2007. The bank will meet on March 18-19.
The Japanese Yen also strengthened against the USD this morning after the revised figures were released. Currently, each USD is worth 146.7 JPY. This currency has lost value for more than a year, mainly because Japan still maintains negative interest rates, in contrast to other major economies in the world .
Ha Thu (according to Reuters, CNBC)
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